Large HP Shareholders Don't get Say in Board
Nominations

March 15, 2007 (PLANSPONSOR.com) - Hewlett-Packard
Co. investors axed a proposal that would have given large
shareholders such as pension funds the clout to nominate
their own candidates to sit on the board of directors, the
Associated Press reported.

The measure – backed by four public pension funds –
would have permitted stockholders who have owned at
least 3% of HP’s outstanding stock continuously for at
least two years to nominate two candidates to the board
(See
Public Pension Funds Want Say in HP Board Nominations).

The New York State Common Retirement Fund, the
Connecticut Retirement Plans and Trust Funds, the North
Carolina Retirement System, and the American Federation
of State, County and Municipal Employees Pension Funds
filed the proposal in September 2006.

The Palo-Alto-based company said allowing the big
shareholders to weigh in would lead to a costly and
divisive proxy fight over director elections, the AP
reported.

The proposal failed at an annual shareholder
meeting for the on Wednesday when it failed to get the
1.8 million shares voted it needed to amend the
company’s bylaws on director nominations. Instead, 52% of
the total shares, or 1.61 billion shares, voted
against the proposal, and more than 800 million shares,
or 39% of the total shares voted, were
cast for the proposal.

According to the AP, some large stockholders were
against the proposal, saying the change would give
investors with a small percentage of the outstanding
shares the ability to wage expensive proxy contests at
the company’s and shareholders’ expense.

HP has been entangled in a spying scandal that has
ended in the dismissal Wednesday of felony charges against
former HP Chairwoman Patricia Dunn and a guilty plea by
three others in connection with the revelation in September
2006 that private investigators working for HP used Social
Security numbers of board members and employees, as well as
those of journalists who report on the company, to obtain
phone records and other data in an effort to discover the
source of boardroom leaks (See
Former HP Employees in Spying Scandal Avoid Jail Time
).

Criminal charges are still being pursued by
federal prosecutors against all except Dunn.